Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

A311- Acronyms > Acronyms > Flashcards

Acronyms Flashcards

1
Q

What makes ACC, actuarial

A

BAPTISED MMM 0
* Business environment allowed for (Regulation, legislation, taxation, competition)
* Assumptions based on appropriate historical experience
* Professional judgement
* Term (long rather than short)
* Interpretation of results of modelling to enable practical strategies to be developed
* Stakeholders’ requirements and risk profile
* Estimation of uncertain financial future events
* Decisions need to be made in short term in light of future outcomes.

  • Models to represent future financial outcome
  • Monitoring and periodically analysing emerging experience
  • Modifying models/strategies based on this analysis
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Types of Actuarial Advice:

A

FIR 1
* Factual
* Indicative
* Recommendations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Stakeholders:

A

DISRESPECT MAC GD 1
* Directors
* Investment managers
* Shareholders
* Regulator
* Employers
* Sponsors of benefit scheme
* Policyholders
* Employees
* Creditors
* Trustees
* Members of benefit schemes
* Auditors
* Competitors
* Government
* Distribution channels- brokers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Actuarial Quality Framework aims to promote:

A

MECA 1
* Methods
* Environment
* Communication
* Actuaries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

External Environment factors:

A

CREATE GRAND LISTS 2
* Corporate structure
* Regulation and legislation
* Environmental issues and climate change
* Accounting standards
* Tax
* Economic outlook (Interest rates, inflation, growth, and exchange rates) ( competitive advantage and commercial requirements) ( underwriting cycle, bank cycle, business cycle)
* …
* Governance corporate
* Risk management requirements
* Adequacy of capital and solvency
* New business environment
* Demographic trends
* …
* Lifestyle considerations
* International practice
* State benefits
* Technology
* Social and cultural trends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Reasons why UW exists:

A

CREED(D)S 2
* Chasing hard rates
* Reduced insurance capacity after large losses
* Ease of new entrants
* Economies of scale maintained at all cost
* Deliberate under pricing by key players to drive out competition
* Delays between selling/writing contracts and assessing actual profitability
* Simple capital requirement regimes when rates are softening and vice versa when rates are hardening

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Economic factors:

A

IS FIERCE 2
* Inflation
* Short-term interest rates

  • Fiscal deficit
  • Imports/exports
  • Employment rate
  • Returns on alternative investments
  • Currency
  • Economic growth
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Aims of a regulator:

A

GRIP 3
* Give confidence in the system.
* Reduce financial crime.
* Inefficiencies in the market corrected and efficient and orderly markets promoted.
* Protect costumers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Functions of a regulator:

A

SERVICE 3
* Setting sanctions.
* Enforcing regulations.
* Reviewing and influencing government policy.
* Vetting and registering firms and individuals.
* Investigating breaches.
* Checking management and conduct of providers.
* Educating customers and the public.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Disadvantages of regulation

A

: EPIC BLOC 3
* Economies of scale less
* Premiums are higher
* Investment returns lower
* Costs

  • Barriers of entry
  • Less insurance coverage
  • Opportunity cost
  • Complex capital requirements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Investment and risk characteristic of assets:

A

SYSTEEM TD+ 9
* Security
* Yield
* Spread (volatility of market values)
* Term
* Expense
* Exchange rate
* Marketability
* ..
* Tax
* Diversification
* Divisibility
* Other such as uniqueness

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

General reasons for holding cash:

A

POURS 9
* Protect monetary values.
* Opportunities to take advantage of.
* Uncertain liabilities.
* Recently received cashflow.
* Short-term liabilities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Economic situations in which cash is attractive

A

GRID 9
* General economic uncertainty
* Recession expected
* Interest rates expected to rise
* Depreciation of domestic currency expected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Characteristic of a prime property:

A

CALL ST 10
* Comparable properties for rent reviews/valuations.
* Age, condition and flexibility of use
* Location
* Lease structure
* ..
* Size
* Tenant quality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Uses of derivatives:

A

HAAS 11
* Hedge
* Assist in asset allocation
* Arbitrage
* Speculate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Theories of yield curve:

A

LIME 12
* Liquidity preference
* Inflation risk premium
* Market segmentation
* Expectations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Main difficulties of overseas investment:

A

MTV 11
* Mismatching domestic liabilities
* Taxation (may not be able to recover withholding taxes/double taxation)
* Volatility of currency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Other practical problems with overseas investing:

A

CATERPILLAR 11
* Custodian needed
* Additional admin required
* Time delays
* Expenses incurred / Expertise
* Regulation poor
* Political instability
* Information harder to obtain/less of it
* Language difficulties
* Liquidity problems
* Accounting differences
* Restrictions on foreign ownership /repatriation problems (confiscation problems)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Ways of valuing assets:

A

SHAM FADS
* Smoothed market value
* Historic book value
* Adjusted book value
* Market value
* ..
* Fair value
* Arbitrage value
* Discounted cashflow
* Stochastic modelling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Regulatory influences on assets held:

A

TECH SCAM Ch16
* Types of assets that provider can invest in
* Extent to which mismatching allowed
* Currency matching requirements
* Hold certain proportion of total assets in specific class, eg government bonds.
* …
* Single counterparty maximum exposure
* Custodianship of assets
* Amount of any one asset used to demonstrate solvency restricted
* Mismatching reserve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Factors affecting investment strategy:

A

A SAD CUTER INVESTOR
* Accounting regulations
* …
* Size of the assets relative/abs
* Accrual of future liabilities in the future
* Diversification
* …
* Currency of the liabilities
* Uncertainty of the liabilities
* Term of the liabilities
* Environmental/social/governance issues
* Risk appetite
* …
* Investment objective
* Nature of the liabilities
* Voluntary and legal restrictions
* Existing portfolio
* Solvency requirements + Statutory valuations + Rating agency solvency level required
* Tax treatment of the assets/investor
* Other fund’s strategies (competition)
* Return (expected long-term)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Considerations in-house or external model:

A

FENCED
* Fit for purpose
* Expertise available in-house
* Need for flexibility
* Cost of each option
* Expected number of times used
* Desired level of accuracy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Model design: operational issues

A

SCARCER FILES-S
* Simple but retains key features
* Clear results
* Adequately documented
* Range of implementation methods
* Communicable working and outputs
* Easy to understand
* Refinable & developable
* …
* Frequency of cashflows- balance accuracy vs practicality
* Independent verification of outputs
* Lengths of runs not too long
* Expense not too high
* Sensible joint behaviour of variables
* Sensitivity and Scenario testing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Sources of data:

A

TRAINERS
* Tables eg. Actuarial mort tables
* Reinsurers
* Abroad (data from overseas contracts)
* Industry data
* National statistics
* Experience investigations on existing contracts
* Regulatory reports and company published reports
* Similar contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Factors affecting data quality and quantity:

A

SEMI COMA

*Size of company
*Existence of legacy systems
*management and staff
*Integrity of data systems
*Class of business
*Organisation (nature of)
*Method of sale
*Age of company

26
Q

Potential issues when using data:

A

QUERIED BEST ARCHER
* Quantity (credibility)
* Up-to-data?
* estimation
* Relevance (heterogeneity)
* Incomplete?
* Exceptional-actuary
* Detail & format
* …
* Balance of homogenous groups underlying data may have changed
* Economic situation may have changed
* Social conditions may have changed
* Trends over time
* …
* Abnormal fluctuations
* Random fluctuations
* Changes in regulation
* Heterogeneity within the group which the assumptions may apply
* Errors in data
* Recording differences ( categorisation of smoker as example)

27
Q

Advantages of industry wide data:

A

PECS
* Pricing if no internal data available
* Experience can be compared with own
* Credibility is high
o Lots of volume
* Strategies (business)
o Enhance market share
 Information on prospective business
 Know what business characteristics you seek when expanding and attracting new business
o Monitoring trends

28
Q

Disadvantages of industry wide data

A

HOOD C
* Heterogeneity 6
o Companies operate in different geographical/social-economic sections of market
o Policies sold may differ (different product features)
o Sales method may differ
o Differing practices
 Underwriting
 Claims settlement
o Different nature of data stored
o Coding used for risk factors may vary
* Out of date data
o Takes long time to collect data from various companies
* Opt not to contribute
o Some industry players may opt not to contribute
* Detail and flexibility inferior than internal data
* Contributors determine data quality
o One company mistakes can distort larger set of data

29
Q

Quality proposal form:

A

CURVED AAI
* Comprehensive
* Unambiguous, well designed questions
* Relevant and Reliable information produced
* Verify key policyholder information
* Easy Coding
* Data checks before inputted into a model
* Additional information dependent on claim size
* All information on proposal, endorsement, claim form must be held
* Interpretation must be limited

30
Q

Features of good quality data:

A

COACH LUCID
* Completeness
* Objective and quantifiable as far as possible
* Accurate
* Consistent with previous data
* Homogonous grouping into model points
* Lowest level
o Such as date of birth rather than age at entry
* Up to date
* Checks should be able to be performed
* Integrated into one system
* Detail level and documentation appropriate
o Audit trail

31
Q

Checks on data (before valuation)

A

PRADA S
* Previous data to verify current data
* Reasonability checks
* Asset data
* Detailed audits
* Accounting data
* Spot checks

32
Q

Factors to consider when setting assumptions

A

LUNCH 20
* Legislation/regulation
* Use of the assumptions
* Needs of the client
* Consistency between assumptions
* How to financially significant is/are the assumption(s)

33
Q

Types of selection

A

SSSTA(TI)C 21
* Self
* Spurious (fake)
* Selective W
* Time
* Adverse
* Temporary initial
* Class

34
Q

Contract design factors

A

AMPLE DIRECT FACTORS 23
* Administration systems
* Marketability
* Profitability
* Level and form of benefits
* Early leaver benefits
* …
* Discretionary benefits
* Interests and needs of customers
* Risk appetite of the parties involved
* Expenses vs charges
* Competition
* Terms and conditions of contract
* …
* Financing (capital requirements)
* Accounting implications
* Consistency with other products
* Timing of contributions or premiums
* Options and guarantees
* Regulatory requirements
* Subsidies (-cross)

35
Q

Parties involved in contract design

A

ALPACASS 23
* Actuaries
* Lawyers
* Providers of benefits
* Accountants
* Customers
* Administrators
* Shareholders/financial backers
* Sales/marketing

36
Q

Expenses incurred by a product provider

A

COST RAID 23
* Commission
* Overheads
* Sales/advertising
* Terminal, eg. Paying benefits
* …
* Renewal administration eg collecting prems/contri
* Asset management
* Initial administration eg setting up new client records
* Design of contract

37
Q

Marketable contracts:

A

TICS 23
* Transparency
* Innovation
* Costs low
* Simple -easy to understand

38
Q

TCF throughout product life cycle:

A

CHAD PP 23
* Claims processing
* Handling complains
* Advice and servicing
* Design
* Pricing
* Promotion

39
Q

Benefits of a good risk management process:

A

SAVIOURS 25
* Strategic decision making improved
* Avoid surprises
* Volatility of profits reduced
* Improved profits via capital efficiency
* Opportunities exploited for profit
* Understand interdependencies/aggregation
* React quickly to emerging risks
* Stakeholders given confidence

40
Q

Operational risk examples

A

ASPECT FG 26
* Administration risk
* Strategic risk
* Pension scheme risk
* Event risk (external)
* Compliance risk
* Technology risk

  • Fraud risk
  • Governance risk
41
Q

Inappropriate advice

A

(CRIMES) 27
* Complicated products
* Rubbish (incompetent) adviser
* Integrity of adviser lacking (due to sales-related payments)
* Model or parameters unsuitable
* Errors in data relating to beneficiaries
* State-encouraged but inappropriate actions

42
Q

insurable interest:

A

FIA MUD PIS 28
* Financial/quantifiable
* Interest in risk being insured
* Amount payable relates to size of loss

  • Moral hazard avoided
  • Ultimate limit on liability
  • Data available to assess the risk
  • Probability of occurrence low
  • Independent risks
  • Similar risks pooled
43
Q

Importance of risk reporting:

A

FRAUD CRIME 29
* Financing (appropriate price, reserves, capital requirements)
* Rating agencies
* Attractiveness to investors
* Understand better (risks and financial impact)
* Determine appropriate control systems

  • Changes over time
  • Regulation
  • Interactions
  • Monitoring effectiveness of controls
  • Emerging risk identification
44
Q

Responses to risk:

A

PIRATE 30
* Partially transfer
* Ignore (reject need for financial coverage- trivial or already diversified)
* Reduce
* Accept (retain all)
* Transfer
* Evade (avoid)

45
Q

Evaluation of risk mitigation options:

A

FIRM 30
* Feasibility and cost
* Impact on frequency/severity/expected value
* Resulting secondary risks
* Mitigation required in response to secondary risks

46
Q

Reasons for using reinsurance

A

DASS LIFE 30
* Diversification
* Avoid single large losses
* Smooth results
* Solvency improvement
* Limit exposure to single events or accumulations
* Increase capacity to accept risk
* Financial assistance
* Expertise

47
Q

Reasons for using ART:

A

DESCARTES 30
* Diversification
* Exploits risk as an opportunity
* Solvency improvements/ source of capital
* Cheaper cover than RI
* Availability of RI not adequate
* Results smoothed
* Tax advantages
* Efficient risk management tool
* Security of payments improved

48
Q

Reasons for calculating reserves:

A

BAD MEDICS 32
* Benefits improvements for a benefit scheme
* Accounts and reports -> published and internal
* Discontinuance/surrender benefits

  • Mergers and acquisitions
  • Excess of A over L to determine discretionary benefits
  • Disclosure information for beneficiaries
  • Investment strategy
  • Contribution/premium setting
  • Supervisory solvency reports
49
Q

Accounting concepts:

A

GRAPED CC MMM 34
* Going concern
* Realisation
* Accruals
* Prudence
* Entity business
* Dual aspects

  • Cost
  • Consistency
  • Matching
  • Materiality
  • Money measurement
50
Q

Common aims of accounting standards (relation to benefit schemes)

A

CARD 34
* Consistency in accounting treatment from year to year
* Avoiding distortions resulting from contribution fluctuations
* Recognising the realistic costs of accruing benefits
* Disclosure of appropriate information

51
Q

Additional reports accompanying accounts

A

BRISK 34
* Board independence & governance
* Risk appetite , exposure & management
* Investment strategy and performance
* Strategic objectives (progress towards)
* Key obligations (performance against)

52
Q

Things to consider when looking at accounts

A

CUBES
* Changes in accounting practices
*UW effect- compare insurers transacting similar types of business
*Basis for valuations
*Exceptional events-> M&A,Internal Restrucutres,Unusual experience,Exceptional expenditure
*Statutory and accounting regulations (country)

53
Q

Reasons why disclosure is important in benefit scheme

A

SIMMERS 34
* Sponsor is aware of financial significance of benefits
* Informed decisions can be made
* Mis-selling is avoided
* Manages the expectations of members
* Encourages take up
* Regulatory requirements
* Security of scheme improved as sponsor/trustees are made more accountable

54
Q

Benefit scheme information to be disclosed in accounts

A

DIM CLAIMS 34
* Directors’ benefit costs
* Investment return over year
* Membership movements

  • Change in surplus/deficit
  • Liabilities accruing over year
  • Assumptions
  • Increase in past service liabilities
  • Method (actuarial)
  • Surplus/deficit
55
Q

Information to be disclosed to benefit scheme members

A

SCRIBE 34
* Strategy for investment
* Contribution obligations
* Risks involved
* Insolvency entitlement
* Benefit entitlement
* Expenses charges

56
Q

When benefit scheme information should be disclosed to members

A

PRICE 34
* Payment commencement
* Request
* Intervals
* Combination
* Entry

57
Q

Issues to include in model of future solvency position:

A

OASESS 35
* Outstanding financial obligations, including minority interests and tax
* Amount and timing of loan/debt redemption
* Surplus asset’s current value
* Estimation of future post-tax profits available to equity shareholders
* Staff relationship problems -> industrial relations such as with trade unions
* Staff benefit schemes especially if in deficit

58
Q

Key principles to consider when determining discontinuance terms

A

PRANCE FC 35
* Policyholder reasonable expectations PRE
* Regulation may prescribe benefits such as max surrender penalties
* Administration expenses and Asset share
* New business disclosure and communication
* Competitive considerations
* Ease of calculation (fair vs simple)
* Frequency of change of discontinuance terms (not too frequent)
* Cost of determining and implementing discontinuance terms

59
Q

Why financial providers need capital

A

REG CUSHION 36
* Regulatory requirement to demonstrate solvency
* Expenses of launching a new product/starting a new operation
* Guarantees can be offered

  • Cashflow timing management
  • Unexpected events cushion eg. Adverse events
  • Smooth profit
  • Help demonstrate financial strength
  • Investment freedom to mismatch in pursuit of higher returns
  • Opportunities, eg. Mergers and acquisitions
  • New business strain financing
60
Q

Reasons for analysing surplus

A

DIVERGENCE 38
Assting the management decision making:

  • Divergence of actual vs expected (show financial effect/significance of)
  • Information to management and for accounts
  • Variance of whole is equal to the sum of the variances from the individual sources

Providing information for other purposes

  • Experience monitoring to feedback into ACC
  • Reconcile values for successive years
  • Group into one-off/ recurring sources of surplus
  • Executive remuneration schemes (data for)

Data checks and calculation checks

  • New business strain (show effects of)
  • Check on valuation assumptions and calculations
  • Extra check on valuation data and process
61
Q

Levers on surplus

A

RETAIL R 38
* Reduce lapses/Withdrawals and increase renewals (persistency)
* Expenses (control)
* Tax management policy (effective)
* Amounts of claim/benefits costs reduction
* Increase investment return with investment policy at acceptable risk appetite
* Likelihood of claims reduction
* Recovery plan

A311- Acronyms (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions